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Saturday, January 21, 2012

Delhi High Court: Both Counter-claim and Revocation Petition Can Continue Concurrently (?)

“Should the respondents/the original defendants be permitted to continue the prosecution of proceedings for revocation of patents instituted by them, before the Intellectual Property Appellate Board (in short “IPAB”) when, purportedly, they have elected to prosecute their counter claims for revocation of the very same patents, in the suits for infringement, filed by the appellant, who is the original plaintiff?”

This was the issue in an appeal before a Division bench of the Delhi High Court in Dr.Alloys Wobben v. Yogesh Mehra & Ors. The appeal was decided yesterday, January 20, 2012 with the Court dismissing the appeal.

FACTS:

Yogesh Mehra, the responsdent/defendant, filed revocation petitions under Section 64 of the Patents Act, before the IPAB starting from 2009 until 2011 against the patents of Dr.Aloys Wobben. 19 of the total 23 revocation petitions were filed before the IPAB in 2009.

In a writ petition filed by Dr.Wobben against the revocation petitions, the Madras High Court ruled against Dr.Wobben and directed the IPAB to hear and dispose of the revocation petitions within a period of 3 months.

Besides filing revocation petitions, Yogesh Mehra also filed counter-claims to the 6 suits for patent infringement instituted by Dr.Aloys Wobben. Each of the 6 counter-claims challenged the validity of the very same patents against which revocation petitions were filed before the IPAB.

In late 2010, Dr.Wobben filed an application before the Delhi High Court seeking stay of proceedings before the IPAB. This application was dismissed by the Single Judge of the High Court. Against this dismissal, Dr.Wobben preferred the appeal in discussion.

DISCUSSION:

Counsel for Yogesh Mehra, the respondent, submitted that when the “nature of challenge” on the same issue between 2 fora (“forums”) was materially different, then both proceedings can continue concurrently. The Division Bench too concurred with this argument of the respondent and dismissed the appeal.

By “nature of challenge”, the respondent sought to strike the distinction that before the IPAB, the challenge was in the form of a “revocation petition”, whereas the action before the High Court by the respondent was in the nature of a “counter-claim”/counter-suit. Therefore, according to the respondent, both the counter-claim and the revocation petition could continue concurrently before two different forums.

The Court also took the view that only when the two proceedings are inconsistent with each other, a party was required to elect between the two (“doctrine of election”). To support this view, the Bench relied upon a judgment of the Supreme Court according to which- where the remedies are not inconsistent, but are alternative and concurrent, there is no bar until satisfaction has been obtained, unless one part gains an advantage or the other suffers a disadvantage.

To me, this view appears flawed for the following reasons:

1. The IPAB was constituted with the object of creating a forum with the expertise to deal with the issue of patent validity.

2. Further, given that the IPAB is treated as an appellate body, which hears appeals against the decisions of the Patent Office, it must be treated as a body with original jurisdiction to deal with revocation of patents.

3. Section 64 uses “or” when it refers to a revocation petition and a counter-claim in a suit. This means, a party has to choose between filing a revocation petition before the IPAB and a counter-claim in a suit for infringement. It does not appear either correct or permissible to file both.

4. Further, as rightly contended by the patentee, litigants and courts must endeavour to avoid instituting parallel proceedings which could lead to conflicting decisions and could embarrass both forums. This is the spirit behind section 10 of the Code of Civil Procure which refers to Stay of Suits.

5. Regardless of the so-called difference in the nature of proceedings between a revocation petition and a counter-claim, the fact of the matter is that both proceedings deal with the same issue, namely patent validity and between the same parties. Therefore, the argument of difference in “nature of proceedings” does not hold water, at least in my view. It certainly does not hold water in light of the framework of the Patents Act.

The respondent countered that there is no provision in the Patents Act similar to Section 124 of the Trademarks Act. Section 124 of the TM Act requires stay of suit proceedings when a rectification petition is filed against a registered trademark. The absence of a similar provision in the Patents Act, according to the respondent, was a clincher and proved that proceedings before the IPAB cannot be stayed.

I am not sure the argument of the respondent draws the correct parallel. Section 124 of the TM Act deals with stay of suit proceedings; whereas in the case, the patentee sought stay of proceedings before the IPAB which had been instituted prior to the filing of the suits for infringement. Therefore, comparisons between Section 124 of the Trademarks Act and the Patents Act are of no relevance, at least in my view.

The comparison would have been relevant had one of the parties (respondent) sought stay of suit proceedings before the Delhi High Court until such time the revocation petitions were disposed off. This was clearly not the case here.The Court alludes to this in Para 12 of the judgment as follows:

“It would be trite to say that principles analogous to section 10 of the Code (Code of Civil procedure) empower a court to stay a suit pending before it if, the cause and parties before it are substantially the same and, the court dealing with the earlier action would have the jurisdiction to deal with the latter action as well. Where Section 10 of the Code does not apply sensu stricto, power is exercised by a court, often under Section 151 of the Code. The supervening object being, to avoid conflict of judgments and decrees. There is no difficulty with the principle, it is its application which at time causes problems. If we were to apply this principle, then we should ordinarily be staying the latter proceedings, that is, the suits pending in this court to await the result of the IPAB action.”

In my opinion, the following makes sense- if revocation proceeding is filed before the IPAB prior to the filing of the suit for infringement, a counter-claim to the suit challenging the validity of the patent must be not be entertained or must at least be stayed. This is because two proceedings addressing the same issue between the same parties and which are capable of delivering the same relief must not be continued concurrently.

In fact, going by this logic, it would have made sense for Dr.Wobben to seek stay of the counter-claims since 19 revocation proceedings had been preferred before the IPAB prior to the institution of the counter-claims.

But my guess is that probably Dr.Wobben did not want the IPAB to deal with the issue of revocation, for reasons best known to him. Probably, Dr.Wobben felt the IPAB proceedings could delay or adversely affect the expeditious disposal of the suit proceedings, and therefore he wanted those proceedings withdrawn or at least stayed.

Interestingly, in this case, the relief sought by the patentee does not appear to be the right one, and the position of the law postulated by the Court is flawed too. What is surprising is that the Court even awarded a cost of INR 5 lakhs (INR5,00,000) to the respondents. We certainly live in interesting times...